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Retail fund business hits an eight-year low

Net retail fund sales in the third quarter slumped to their lowest level since 1996, according to the Pridham report.

New business inflows of 418.2m in the third quarter are less than a tenth of their level during the first quarter of 2000 when they peaked at 5.4bn. Forty-four per cent of fund groups saw net retail outflows.

September saw the first-ever monthly net Isa outflows and August net sales were just 77.8m.

Gross retail sales for the quarter were 6.7bn but the size of the repurchase market and low net sales show the vast majority of business is being poached from rivals. Bancassurers and life offices were hit hard, with Isa sales at Scottish Widows, many through Lloyds TSB, falling to a third of the 68.5m over the same period last year. Legal & General fell by 40 per cent from 76m for the third quarter 2003.

Chelsea Financial Services managing director Darius McDermott says: “In the past quarter, we have seen the first month of net redemptions and it is worrying the Government seems to have destroyed the nation’s favourite savings product.”

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